For many business leaders, there is no doubt that the goal-strategy-outcomes (GSOs) approach is a highly effective way to document and communicate strategy. So why do organizations often struggle with successful GSO implementation? Given our years of GSO consulting experience, we believe there are several factors that determine the success or failure of adopting GSOs. To make sure your organization has a high probability of success, consider these five critical success factors (CSFs):
- Leadership leads by example
- Focus shifts from outputs to outcomes
- Fund goals, not initiatives
- Align up, down, and across the organization
- Establish a Value Realization Office (VRO)
Let’s take a closer look at each of these CSFs:
1. Leadership Leads by Example
First and foremost, senior leadership must embrace the use of GSOs as the primary strategy communication approach. While other strategy development methods are still in vogue (e.g., Balanced Scorecard, 4 Disciplines of Execution [4DX], Management by Objectives [MBOs], etc.), GSOs provide a flexible yet rigorous mechanism that brings the clarity necessary for true organizational alignment. Leaders need to use GSOs themselves (“do as I do, not as I say”) and ensure that they are effectively employed at lower levels of the organization. GSOs cannot be optional if they are to work effectively.
2. Focus Shifts from Outputs to Outcomes
One of the most obvious mistakes is when the outcomes of GSOs are written as a list of things to do, which are really outputs. On the other hand, outcomes are results that make a measurable impact, such as improved customer satisfaction, higher quality, lower costs, to name a few. Simply completing a task or delivering a feature doesn’t necessarily make an impact. Outcomes have to move the needle on a measure that is important to the organization.
3. Fund Goals, Not Initiatives
In many companies, initiatives are funded during the annual planning and budget allocation cycle. Unfortunately, many initiatives are funded because they seemed like a good idea at the time; or maybe it’s been in the queue for a while and an executive thought it was still important. The problem with both of these scenarios is that capital funds (which are almost always in short supply) are allocated to activities that may or may not contribute to the company’s latest goals. This often results in a missed opportunity to shift that money to more important projects that could make a direct impact on the achievement of enterprise objectives. In this case, GSOs provide the basis for funding goals, resulting in strategies that can be directly traced to a corporate goal and measured to show that the investment is a wise one.
4. Align Up, Down, and Across the Organization
We’ve all seen the cartoon where people in a boat are pulling their oars in different directions, then wondering why they’re not getting anywhere. Lack of organizational alignment is the biggest contributor to wasted money and effort. A 2017 LSA Global survey of 410 companies across eight industries revealed that highly aligned companies grew revenue 58% faster and were 72% more profitable, while outperforming misaligned companies at impressive rates. It’s just common sense that if all parts of an organization are working towards the same end, it will be more effective in many ways: increased productivity, better employee engagement, improved customer satisfaction and retention, etc. When implemented correctly, GSOs provide the opportunity for alignment across multiple dimensions because each level of the company internalizes and interprets the higher level’s GSOs from their unique perspective leveraging their core strengths. The aggregation of each organizational department’s outcomes contributes to the accomplishment of higher-level goals.
5. Establish a VRO
Finally, it’s important for an organization to formally establish an enterprise-wide practice that ensures GSOs are being created and used correctly. We call this the Value Realization Office (VRO). Not only does the VRO become a center of excellence in its own right, it also provides the training, coaching, and tooling necessary to give an organization the greatest potential for GSOs to lead to operational success. Tools such as DevStride provide an excellent way to organize, track, and measure a company’s GSOs. In addition to consistent goal implementation, the formal practice also allows for customization of an GSOs adoption/transformation program to account for the uniqueness of the corporate culture.
Remember, just because your organization is using or moving to GSOs doesn’t mean you’ll automatically succeed. Taking into consideration these five critical success factors will improve your chances of an auspicious adoption.
About the author: Colin O’Neill is an entrepreneur, thought leader, business executive, international trainer, organizational change agent, conference speaker, author, and executive coach. For the last 40 years, Colin has served as a consultant to Fortune 100 organizations and all levels of government. In 2011 he co-founded Scaled Agile with Dean Leffingwell, now the world’s leading enterprise Agile consulting, training, and certification firm. In 2014, Colin launched Value Stream Global to bring a broader view of enterprise agility to improve product development flow, create value, and enhance business outcomes. In 2021, Colin co-founded StrategicOps with Nishant Sasidharan to bring outcomes-based thinking and practices to organizations who want to ensure they are building and delivering the “right” products and services for their customers. While promoting growth, strategy, and alignment, Colin remains committed to calling individuals and organizations to their highest and best.